May 21, 2021 – Over the last week, the Federal Reserve extended a rule modification allowing certain bank directors and shareholders to apply for Paycheck Protection Program loans, and the Small Business Association announced a May 24 deadline for applications to the Restaurant Revitalization Fund. Further, a bipartisan bill was introduced in the U.S. House of Representatives that would redirect up to $10 billion in federal contracts to small businesses.

Regulatory Developments Relating to the Pandemic 

Federal Reserve Extends Rule Allowing Additional PPP Loans to Small Businesses Owned by Bank Directors and Shareholders

On May 14, the Federal Reserve Board announced a third extension of a temporary modification to its rules in order to allow certain bank directors and shareholders to apply for Paycheck Protection Program loans for their small businesses.  To prevent favoritism, Federal Reserve rules ordinarily limit the types and sizes of loans that bank directors, shareholders, officers, and businesses owned by these persons can receive from their related banks. These requirements have prevented some small business owners from accessing PPP loans, especially in rural areas.  The modifications, first announced April 17, 2020, liberalize this policy for PPP loans.

SBA Sets Restaurant Revitalization Fund Application Deadline

On May 18, the Small Business Administration announced that eligible restaurants have until May 24 to submit applications to the Restaurant Revitalization Fund (RRF). The $28.6 billion RRF was established by the American Rescue Plan Act of 2021 to provide funds to restaurants, bars and other eligible businesses that have experienced significant loss of revenue due to the pandemic.  The program provides recipients with funding equal to their pandemic-related revenue loss up to $10 million per business and no more than $5 million per physical location. Recipients are not required to repay the funding as long as the funds are used for eligible expenses no later than March 11, 2023.

Fiscal Stimulus Legislative Proposals 

H.R. 3350: Small-Business Procurement Utilization Reform (SPUR) Act

On May 19, Representatives Joe Neguse (D-CO), Kweisi Mfume (D-MD), Maria Salazar (R-FL), Andy Kim (D-NJ), and Dean Phillips (D-MN) introduced bipartisan legislation that would raise the Small Business Administration’s government-wide contracting goals by redirecting up to $10 billion in federal contracts to small businesses.

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